This section lists losses that have occurred in your account(s) within the past 30 days, and that are permanently disallowed because of IRA wash sale adjustments. It may be possible to avoid permanently disallowing these losses if you open a qualified position on the same underlying security in a taxable account, before the +30 day window ends.

Consider the following scenarios and how IRA wash sales may factor in:

Scenario 1:

Say you had a loss on 100 shares of AAPL on November 15.

You purchased 100 shares of AAPL in your IRA on November 12.

You also purchased 100 shares of AAPL in your taxable account on November 18.

In this scenario there are two trades that could trigger a wash sale, one in the IRA, one in the taxable account, both within the 30 day +/- wash sale window. The IRS does not specify which of these trades should trigger the wash sale.

Since IRA wash sales always permanently disallow a loss, TradeLog seeks to adjust wash sales to a taxable trade first if possible, for the least negative tax impact. Therefore, TradeLog will adjust a wash sale to the 100 shares purchased in your taxable account in this example.

Scenario 2:

Say you had a loss on 100 shares of AAPL on November 15.

You purchased 100 shares of AAPL in your IRA on November 12.

You have no other positions on AAPL opened within 30 days of November 15 that are eligible for adjusting a wash sale.

In this scenario there is no taxable trade available to adjust the wash sale to. Therefore TradeLog has no choice but to use the IRA trade and permanently disallow the loss. In this situation the Potential Wash Sales Report would appear as figure 3 below:

Figure 3

Figure 3 shows that your loss occurred on November 15, 2013 and the + 30 day window ends on December 15, 2013. Currently the wash sale is being adjusted to a trade opened in your Schwab IRA account on November 12, 2013.

Important note: the number of shares/contracts showing in this section only represents the number that have an IRA wash sale attached. You may have actually had a loss on more shares than those displayed. For example: you may have closed 1,000 shares of AAPL on 11/15/2013, but you only have an IRA wash sale on 100 because you only opened 100 shares in your IRA. In such a case, opening a 100 share position in a taxable account may not be enough to avoid the IRA wash sale, you may have to open up to 1,000 shares. Use the Wash Sale Detail report in conjunction with this report to help understand complex situations.

This information may allow you to make decisions about your trading. Some possible options:

You may want to open a position for the same underlying security in a taxable account in order to trigger an alternate wash sale in order to avoid permanently losing your loss.

You may choose to do nothing, and permanently disallow this loss.

How to use this report:

If you trade stocks and/or options on the same security in both taxable and non-taxable IRA accounts, then you need to be concerned about IRA wash sales all year long. This section of the report may be helpful throughout the year in order to avoid permanently disallowed losses.

In all situations, keep in mind that the information presented on this report should not be construed as tax, investment, or legal advice; you are responsible for your trading decisions and any results thereof. TradeLog software is only able to report based on the information that has been imported into it. Factors such as user error or inaccurate trade information could alter the accuracy of this report.